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Is Vendor Management Holding Credit Unions Back?

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Technology is rapidly changing the way credit unions do business, with new solutions at every turn. However, sometimes finding these new solutions can be difficult. To find a new vendor, the burden is on the credit union to do the necessary research, find the solutions that look best for them, vet the new company and more. This presents a challenge for any financial institution that wants to find a more efficient vendor or bring on a new one that offers an innovative product or service.

Searching and researching

Whether credit unions are looking to replace an old vendor that they are not satisfied with or simply bring on a new and innovative service, the long process of vendor selection begins with research. Since there is not a service like Yelp or Angie’s List for credit union vendors, credit unions must track down solutions and companies based on their own research. Currently, financial institutions do not have easy access to information on what it may be like to work with a vendor. Whether it be via internet searches or simply talking to others in the industry, the process of digging up important information on vendors takes time and diligent effort on the part of the credit union.

Simplifying with data

This process can take months, depending on the resources available to them. For many credit unions, they do not have the luxury of extra time and resources to spend on this search process. This is why credit unions must partner with technology companies that can provide them with the information they are looking for, giving them a level of transparency they would not have otherwise.

Though there is not a site like Yelp where others can leave their reviews, credit unions can tell a lot about a vendor just by looking at some key data points. Instead of having to gather information on vendor performance, pricing and so on from multiple sources, having easy access to information about the vendor through a technology partner could be just the solution they need. Knowing how quickly a vendor works, how much they really cost, etc. can be crucial in saving credit unions time in their search.

Having their hands on data about outside vendors can also aid the credit union in seeing how their current ones measure up. Seeing how current vendors compare to the competition can really help a credit union decide if they should make a change or not. Cutting down the amount of time it takes to research and onboard a new vendor can open so many opportunities for credit unions to bring on new and innovative technology solutions that not only make their jobs easier, but make member’s lives easier, as well.

Making the most of limited resources

This process of vendor selection can be a burden for smaller institutions or those that may not have the additional resources necessary to take on this task. Credit unions can often struggle with this process, since many do not have the extra manpower or funds that are required for a successful search and implementation.

Unfortunately, this factor is holding credit unions back from not only bringing on new and innovative solutions for members, but it is also deterring them from making a change when a current vendor is underperforming.

Take lending for example. A certain vendor could have promised the credit union property reports within three days, but they might end up taking four or five. This vendor is slowing down the entire mortgage lending process for the credit union. Even when the vendor might be the one thing standing in the way of greater efficiency in the lending process, the credit union might choose not to swap to a faster vendor simply because the process of finding and bringing on someone new is just too long and difficult.

Regulatory compliance is also another burden that falls on the credit union. A vendor that might be risking the credit union’s regulatory compliance can cause a lot of issues – ones that must be addressed swiftly. Credit unions must be able to more readily change to a vendor that they can ensure meets their guidelines and keeps both members and the credit union compliant and safe.

The process of selecting, implementing and managing vendors can be tricky and time consuming, but partnering with a technology company could be the only thing credit unions need to simplify the process. Having a partner that tracks performance on a variety of vendors frees up time and manpower for the credit union. With greater transparency about vendor data, credit unions will be more easily able to improve and innovate.

Jorge Ponce is Director of Product and Vendor Management at Austin, Texas-based FirstClose, a highly respected provider of best-in-class property & borrower data intelligence and settlement services nationwide.

This content is for CU BUSINESS eMagazine , Special Deal: 2 websites , and NEW! The Leadership Team Builder Group Subscription members only.
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